Connecticut Issues Cease and Desist to Kalshi Amid Legal Battle

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00:00Meanwhile, as you mentioned, there is some pushback on Calci, Robinhood, Crypto.com,

00:07on a state-by-state basis. It's not all of them. Dan, it does appear that Connecticut is one of

00:12those states that seemingly wants to have the courts weigh in, and until they do, they're

00:18issuing a cease and desist letter. I know that Calci has fought back in particular on some of

00:23these. Do you anticipate that happening here? They have already fought back. Calci filed a

00:29federal court lawsuit late last night within a few hours or within at least a day of the cease

00:35and desist letter being issued because the danger is Connecticut demanded that Calci, Robinhood,

00:39and Crypto.com immediately cease and desist their event contract activities within Connecticut,

00:45and every day, every hour that Calci doesn't run to court, there's potential exposure under

00:50Connecticut's civil and criminal laws, and the penalties for violating state anti-gambling

00:56laws is very severe. There could be individual liability on the officers, and each transaction

01:00could carry a civil penalty which could amount to nine figures. So, of course, Calci's response

01:06is the same that they have invoked in every other cease and desist letter. When they get hit with one

01:11of those letters, they run into court right away and try to frame the narrative around this argument of

01:18federal preemption because if they lose the race to the courthouse and the states file first in state

01:23court, the question then becomes whether these contracts are legal under state law, which is a

01:28much more disadvantageous situation to be in for Calci. So, Calci's successes initially in the federal

01:37courts stem from the fact that they won the races to the courthouse, but even today with the trend going

01:44decisively in favor of the states with two Nevada court rulings, a Maryland court ruling, and a Massachusetts

01:50federal ruling, I think increasingly the federal courts are giving a thumbs down to Calci's premise

01:57that this federal preemption over state anti-gambling and state sports betting laws. So, the battle is going

02:03to be waged in the federal courts around the country, and as states continue to win these preliminary

02:08battles, it may draw more states like Connecticut into the fray because now if you're New Hampshire, if you're

02:15Pennsylvania, why wouldn't you issue a cease and desist letter if the states are winning these battles?

02:22And in Massachusetts, a very similar story progressing here, Dan, is that correct?

02:28With one critical difference. That is the only forum in which the state sued first and brought it in state

02:35court under state law on the Commonwealth's own motion for a preliminary injunction. And Massachusetts won the

02:41battle of the venues there because Calci tried to remove it to federal court, Massachusetts filed a

02:48quick motion to remand, and the federal court sent it back to state court on the basis that there was no

02:54complete federal preemption. So now this is the equivalent of the Commonwealth of Massachusetts playing

02:59the home opener in Fenway Park with a state court judge applying state law and undoubtedly, not undoubtedly,

03:06but I would say there's a 99% likelihood that the superior court judge on Tuesday morning will

03:13ultimately rule in favor of the Commonwealth of Massachusetts, which could make Massachusetts the

03:18first state in the entire country where Calci has to pull its sports event contracts. And they're claiming,

03:24Calci's claiming, well, they can't do it. It would irreparably harm them. So they may lose this battle,

03:29and it could, it could have a cascading effect around the country in other pending federal cases.

03:36Wow. Okay. Give us an update in New York. I know a big hearing coming up on the 15th.

03:41Uh, the New York state attorney general was sued by Calci, similar situation to Connecticut and

03:46Massachusetts, actually similar to Connecticut, cease and desist letter. Within five hours, Calci ran to

03:51federal court. The hearing on the motion for a preliminary injunction filed by Calci will be held,

03:56technically held the week of December 15th. And in a major development yesterday,

04:02a coalition of native American tribes filed an amicus brief in support of the New York attorney

04:07general's legal position to push back against Calci's request for a preliminary injunction.

04:12The tribes are undefeated three and O when they're amici curi in all these, uh, national court cases.

04:19Their, their, their briefs have made a seismic difference in how these cases turn out.

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